Retail tenancy predictions prompt pop-up shop tips

Start-ups have been urged to use pop-up shops as a way to test the market before making a larger investment, following predictions that “monolithic” large stores could be on the wane.

According to Michael Baker, principal of retail advisory group Baker Consulting, there are new opportunities to “create a buzz” around shopping centres.

“We’ll see the gradual diminution in importance of traditional monolithic big box anchors, to be replaced by co-anchoring and temporary space-sharing arrangements,” Baker told Inside Retail.

“It will be important that planning regimes allow [shopping centres to evolve] by giving centre operators a freer hand regarding design and tenant mix.”

According to Scott Williams, founder of Instant Retail and Pop Up Shops Melbourne, major shopping centres will always have so-called “big box anchors”.

“I can’t imagine the pop-up shop concept taking the place of a permanent anchor like that,” Williams told StartupSmart.

But Williams agrees shopping centre operators need to make it easier for temporary retailers. He says while temporary retailers can upset permanent tenants, there are ways to avoid this.

“I think it’s just about being sensible – not taking your product into the market of a permanent retailer,” he says.

Williams’ comments come after online shoe retailer StyleTread was forced to close a kiosk at Westfield Parramatta following a conflict with existing tenants.

According to Williams, retailers should treat pop-up shops not only as a sales platform but as a marketing opportunity or an ideal way to test the market.

“Make it more of a marketing exercise so people appreciate the brand more. A lot of online stores are offering these pop-up shops,” he says.

“With the state of retail vacancies as they are now, it’s up to the landlords and real estate agents to come around to this idea of allowing temporary tenants.”

“It’s a hassle to sign them up and it’s not a great revenue stream for landlords, but the potential is there.”

“If you allow businesses who are genuinely saying, ‘We think this is the right location but we want to test it out for three or six months’, then it should be a win-win.”

“What’s the landlord got to use?”

If retailers were to receive this option, it could entice them to take out longer leases since they already know the location is appropriate, Williams says.

“To sign up and do a permanent lease is a significant investment… A temporary lease is a great opportunity to go in and test the market, and I think that will happen more,” he says.